Mr. President, Mr.
Speaker, Madam Chief Justice, distinguished members of the Legislature,
honored guests, fellow New Jerseyans, a week ago this address had a very
different opening. But nothing I have encountered in this past year has
personally shaken me as much as the human tragedy we witnessed this past
week.

The failure of government in this instance to
safeguard the health and welfare of these three children is beyond
excuse -- it is sickening.

We have no more fundamental obligation than
protecting those who cannot protect themselves.

I will not come before you and defend the status
quo because it is indefensible.

Nor will I tell you that this problem can be
solved with quick and simple solutions.

The problems at DYFS have existed since its
creation. These are difficult, difficult jobs in the most trying of
neighborhoods and circumstances. But I will not accept that as an excuse
for failure.

We are fortunate that in Commissioner Harris we
have an individual with the experience and credibility to bring real
change to this agency.

I am asking for the Legislature's help in making
DYFS work for our children.

This tragedy must remind us every day of our
obligation; whether protecting the weakest child, the frailest senior
citizen, or struggling families, we only succeed when our shared purpose
is making their lives better.

The job ahead of us is very clear.

We face a deficit approaching $5 billion.

Congestion and sprawl threaten our quality of
life.

Auto insurance continues to frustrate New Jersey
residents.

Our schools must meet new challenges while
teaching timeless lessons.

If we are to take on these issues and fight to
restore the quality of life that has made this State great, those of us
in public service must be prepared to answer two simple questions about
our actions:

Who are we willing to stand up for?

Who are we willing to stand up to?

A year ago, for instance, we said that we wouldn't
balance our budget on the backs of our hard-working families.

At that time, even before we could sit at our
desks, we said it was time to stop spending money we didn't have on
projects we couldn't afford.

From day one, we took responsibility for our
future through a series of hard choices and tough decisions.

Within six short months we faced a single
overriding and all-consuming problem -- a $9 billion deficit; the
largest in our State's history.

I can't help but be reminded by what John F.
Kennedy noted within a few months of assuming the presidency:

"When we got into office," Kennedy said, "the
thing that surprised me the most was to find that things were just as
bad as we'd been saying they were."

During the economic prosperity of the 1990s, the
State went on an unprecedented spending spree that bought short term
gratification at the expense of sound fiscal policy.

A decade of surplus dissolved into record
deficits.

But despite unprecedented levels of spending,
government was unable to provide basic services to its citizens.

For all the spending, DMV was left with an
antiquated computer system unequal to basic security and customer
service needs.

For all the spending, the EZ-Pass system didn't
work and was $469 million in debt.

For all the spending, literacy and early childhood
education were virtually ignored.

For all the spending, auto insurance fraud
enforcement fell and good drivers could not get car insurance.

For all the spending, environmental enforcement
was gutted.

Government spent your money -- but it didn't stand
up for you.

From my first day in office, I said we were going
to restore fiscal responsibility to the State of New Jersey and live
within our means and we did.

Like many families across New Jersey, we took
advantage of low interest rates and re-financed the state debt and saved
over 60 million dollars.

We kept spending below the rate of inflation, but
we maintained state aid to communities and schools.

We restored tax fairness, by eliminating loopholes
in the Corporate Business Tax that allowed 30 of the 50 largest
employers to pay only $200 a year in taxes.

We proved that if we work together, we can make
our state work better.

It didn't always go as smoothly as I would have
liked. I broke my leg ... and I had some other missteps. But where I
come from, people admit their mistakes, learn from them, and move on.

So I want to acknowledge and take responsibility
for my mistakes, because too often people in government don't.

But don't believe for one second the cynics and
critics who say that nothing has changed in New Jersey.

Just go to Karen Ewan's first grade class in
Burlington County and see the impact that a reading coach like Judy
McGonigle is having.

Ask a parent whose child is enrolled in one of the
book clubs we created -- see the excitement in a little girl's eye and
ask if we have made a difference.

Visit one of the 81 criminals arrested for
document fraud at the DMV and see if they think Trenton's attitude has
changed.

Talk to the officials at Parsons who run the
State's auto emissions testing who had their contract slashed by $17
million a year and ask them if Trenton has become more demanding.

Ask the E-ZPass contractor we fired and replaced
with a competent and nationally recognized E-ZPass operator if the
status quo is still acceptable.

Ask the son or daughter of a victim of 9-11 if
having a scholarship fund and free tuition at New Jersey State schools
has made their burden a little lighter.

Senator Bennett deserves our praise for his
leadership on this important achievement.

This year, to honor the memory of Trooper Scales,
we will provide funding for the law enforcement officer memorial
scholarship program.

Ask the gun lobby -- who finally saw their
stranglehold on Trenton broken when we passed the first childproof
handgun law in the Nation -- if the safety of citizens has finally
prevailed over the power of the special interests.

Senator Codey and Assemblywoman Weinberg fought
tirelessly for this legislation and we thank them.

Ask the thousands of commuters who for the first
time can find a clean seat on New Jersey Transit or a parking space, if
government has made their life better.

Ask lawbreaking polluters whether we have put
Trenton's environmental cop back on the beat, with real enforcement and
fines when you violate our standards.

And ask Rhonda Berry, a two-time breast cancer
survivor, who received treatment close to home in a world-class facility
-- or a researcher who's finally getting support searching for new cures
if state government is making a difference.

My friends, make no mistake, we still face great
challenges and government cannot promise to solve every problem.

But we have begun to make life a little easier and
a little better for New Jersey's hard working families.

We are meeting the challenges of new problems that
were unimaginable just a few years ago.

Under the leadership of Commissioner Dr. Clifton
Lacy, New Jersey is the only state with bioterrorism rapid response
teams on call 24 hours a day.

With the FBI and State Police, we have trained
over 1,000 local law enforcement officers in counter-terrorism and we
are working with New Jersey's business leaders to safeguard our 110 most
essential sites.

And next year we will begin installing a
state-of-the-art intelligence system that will be shared by local police
departments.

And, once again, we made protecting New Jersey's
environment a priority.

After eight years of lax enforcement, we no longer
tolerate polluters policing themselves.

We collected more fines and more compensation for
environmental damages in our first year than the prior Administration
collected in eight.

I joined a bipartisan coalition of states to take
the Federal Environmental Protection Agency to court to stop Midwest
power plants from polluting New Jersey's air.

If the Federal Government will not provide the
leadership to protect the air we breathe, reduce pollution, and protect
New Jersey's coastline, then we will.

These are the first steps in transforming the old
Trenton into a government driven by common sense and dedicated to the
common good.

As a result, I can report to you that the State of
our State is better today than it was yesterday, and it will be even
brighter tomorrow.

But if we are to create an enduring quality of
life for New Jersey families, then we must stand up and fight for New
Jersey's future right now.

Year after year we have returned to this capitol
and we have talked about auto insurance; we have talked about education;
we have talked about property taxes.

At every turn we have treated the symptoms but not
the root cause. But these are not separate and distinct problems.

They are the result of a chain reaction set off by
uncontrolled development.

For years, all over New Jersey we thought if we
built one more road, one more mall, one more housing development, our
problems would be solved. The truth is -- that is the problem.

There is no single greater threat to our way of
life in New Jersey than the unrestrained, uncontrolled development that
has jeopardized our water supplies, made our schools more crowded, our
roads congested, and our open space disappear.

And the irony is that the very promise that this
development would lower our property taxes has turned out to be false.

In fact, the opposite is true. Runaway development
drives up our property taxes, it doesn't lower them.

We cannot; we must not; we will not let this trend
continue. Because if we do, the very appeal that our state has held for
decades for aspiring middle class families will evaporate before our
eyes.

At the dawn of the last century, President Teddy
Roosevelt saw what unchecked logging and development were doing to our
national landscape.

He took on the special interests and created a
national forest system that preserved our forests from destruction and
introduced an ethic of conservation.

At the dawn of this century, New Jersey faces a
similar and even more urgent challenge.

Will we take on the special interests, and finally
end the cycle of unchecked development that is destroying our quality of
life?

We must do this right, we must do this smart, we
must do this together, and we must do it now.

We must find the will to stop development that
costs more than it saves, takes more than it gives, and that diminishes
our lives and degrades our surroundings.

Every day in New Jersey we lose 50 acres to
uncontrolled, thoughtless development -- 50 acres every single day which
we will never get back.

It is time to draw the line and say "no more" to
mindless sprawl.

We must make our government a force for change
rather than an instrument that is misused to enable more and more
misplaced development.

Here's how senseless development is in this State:

New Jersey is the most congested State in the
Nation. But under our laws, a local town cannot even consider the impact
of additional traffic when it reviews new development.

Here is another example of just how rigged the
system is against our communities:

Wealthy developers use their deep pockets and
expensive legal talent to take towns to court if those towns dare oppose
their development efforts.

They can effectively bully unwilling taxpayers
into submission.

For too long towns across this State with limited
resources have been on their own.

I want to recognize Mayor Jay Weeks from Lebanon
Township. His town was bullied and he had no one on his side.

Today, they have the full legal weight of the
State's Attorney General, and towns across this State will be given the
legal firepower from our administration to fight developers when they
need it.

Too often the law doesn't allow communities to
protect their own taxpayers. So I will propose empowering towns with the
legal and zoning tools to control and manage their future development.

No longer will communities be forced to stand
helplessly by while inappropriate and unwanted development occurs.

No tool is more important to a mayor than the
ability to say "no". So I will propose allowing municipalities to impose
a one year building moratorium.

The message should be absolutely clear: If you
want to build in over-developed or protected areas we will do everything
in our power to stop you.

However, if you want to build and grow consistent
with smart growth, then we will help you get regulatory approvals
quickly and make sure the infrastructure is there to support you.

That means we will have one State map that we will
live by and not one dollar of taxpayer money will be spent to subsidize
sprawl anymore.

We will have rules and regulations that say "no"
to development in all the wrong places and "yes" to development that
works for communities.

The days of builders saddling taxpayers with the
costs of development are over.

We will establish impact fees so that developers,
instead of local taxpayers, bear the burden for the cost of added roads
and new schools.

Let me say to those who profit from the strip
malls and McMansions -- if you reap the benefits, you must also take
responsibility for the costs.

We must recognize that the consequences of
development don't end at the border of one town.

If we are going to truly control development, we
must look for regional solutions.

It can no longer be acceptable to let one town
develop as it pleases to the detriment of its neighbors.

We must have a mechanism to plan and control
regional growth.

The answer isn't to create more layers of
government, but to make County and regional planning authorities more
effective and professional.

This should be part of a larger effort to work on
a regional level to plan better, save costs, and share services.

I want to thank Majority Leader Roberts for his
efforts here.

The answer to congestion and sprawl isn't only
saying "No".

We must make our urban centers, older suburbs, and
rural towns more viable and attractive by redeveloping brownfields and
steering infrastructure spending to these areas.

Farmland preservation is vital to ensuring a way
of life in our rural areas.

I am committed to a goal of preserving 20,000
acres of farmland a year.

However, open space is not just a rural issue. For
too long, our suburban and urban park system was allowed to deteriorate.

Our state park system has not been expanded in
seven years. Thousands of New Jersey families are turned away from parks
every year because of overcrowding.

Today I am setting a goal of creating or upgrading
200 local parks and adding at least two state parks in the next three
years. We will also plant 100,000 new trees across the Garden State.

In addition, we must seize the moment to preserve
one of our most precious and largest undeveloped natural areas, the
mountainous Highlands of northwest New Jersey.

The Highlands, which provides one-third of New
Jersey's drinking water, is being consumed by sprawl, and if we fail to
act now, the opportunity may be lost forever.

I have asked Treasurer McCormac to reform the open
space bonding process to stretch our open space dollars without
increasing debt.

We will be able to devote at least an additional
$100 million over the next three years -- fully a 15 percent increase --
to open space protection.

The Treasurer also will implement a limited time
capital gains tax waiver for those landowners who sell their property to
our open space program, creating a new incentive for conservation, and
effectively lowering the price for the state to buy threatened land.

I know what I have outlined here will not be easy
to pass. There will be vested interests lined up across this State and
outside that door to oppose us. The pressure will be enormous. But we
cannot turn back or postpone this battle.

It is the fight that will define and shape the New
Jersey we leave behind for our children and grandchildren.

It is the fight that will define who we are, what
we stand for, and who we are willing to oppose.

It's a fight we must win.

Even as we fight to shape the future landscape of
our state, we must also focus on those issues that have strained our
cost of living for too long.

Our auto insurance problem didn't occur overnight
and it won't be solved overnight. But we have begun to fight back.

Starting from our first day in office we took on
the problems of insurance fraud and of uninsured motorists that have
driven up rates for good drivers.

We have more than doubled the number of defendants
charged with fraud, more than doubled the number of guilty pleas
entered, and more than doubled the number of fines from the previous
Administration.

We have cracked down on unscrupulous insurance
companies. We began aggressively investigating the companies that refuse
to provide insurance under the law.

We created a team of insurance specialists to help
citizens find affordable auto insurance.

We have recognized that uninsured drivers increase
rates for everyone.

We will have zero tolerance for those who cheat
the system and we will create a new crime of insurance fraud with
mandatory penalties.

These efforts are merely the first actions we will
take to reverse the years of neglect and short-term decisions that made
the crisis worse.

There is bipartisan legislation pending in the
Legislature intended to make significant improvements in our
marketplace, reduce regulations, and create more competition.

This is an overdue recognition that the auto
insurance crisis is no longer simply about rates -- it is about
accessibility. We must act before it becomes impossible for good drivers
to find insurance.

I applaud Chairman Baer, Assemblyman Greenwald and
Senator Bucco, but I also believe that our responsibility goes beyond
improvements to the marketplace.

We must ensure industry responsibility, basic
consumer protections, and stop the policies that force good drivers to
subsidize bad drivers and the uninsured.

We will create more choices to push down rates,
empower consumers with more information, and demand more accountability
from both drivers and insurance companies.

When I talk about good and bad drivers, let me be
clear -- almost 94 percent of all drivers in New Jersey have fewer than
two points on their license.

It is the small percentage of truly bad drivers
who force the rest of New Jersey to pay for their indifference.

Under this plan the winners are the nine out of 10
good drivers who deserve a break.

Drivers who commit fraud must pay higher rates and
companies must be allowed to cancel policies that were obtained through
false information.

Bad drivers with more than six points should pay
higher premiums than good drivers with zero to four.

For the uninsured who truly can't afford the high
cost of premiums, we are creating a new dollar a day basic policy to
increase access and cut down on the number of uninsured.

I am also prepared to work with the Legislature to
improve the regulatory environment and attract more companies to our
state.

We're going to reform regulations that are driving
companies out of New Jersey so we have more competition, not less.

I'm tired of hearing ads for affordable car
insurance that end with the line "not available in New Jersey".

Over the past ten years, Trenton's bureaucracy
ruled with red tape instead of common sense.

Today more and more companies are threatening to
leave the state. Companies are entitled to a basic certainty so that
they can operate with confidence.

I won't guarantee companies the answer they want,
but I will guarantee they get a timely answer.

We are willing to make the regulatory road
smoother, but insurance companies will not get a free ride.

Every consumer should be given at least three
different rate and coverage options.

We will also provide report cards that detail
customer satisfaction so consumers can make informed decisions.

Too often consumers are paying for coverage they
no longer need because they have never been given the choice to update
their policies.

And we must no longer allow insurance companies to
cancel coverage if a payment is mailed on time but received one day
late.

Our agenda is a balanced approach to a
long-standing problem.

We owe the drivers of New Jersey quick legislative
approval of auto insurance reform.

We also need to reform the DMV bureaucracy that
has frustrated New Jersey drivers for decades.

We have squandered enough time in acting on the
recommendations of the bipartisan "Fix-DMV" Commission.

It is time to fix a broken agency that represents
government at its worst.

It is time to give New Jersey the security that is
required by hiring additional police and more investigators.

It is time to give drivers the service they
deserve by starting Saturday hours, improving the customer service.

I want to commend Speaker Sires and Senator Sacco
for their leadership on this issue.

It is not a partisan problem and it should not be
a partisan issue, but for those who stand in the way, I ask them to
explain their actions to all those who stand in line at the DMV.

The issue closest to my heart is education.

At my inauguration I said we would make literacy
the top education priority in New Jersey.

If a child can read, the world is an open book.
But if they can't read, that child will never reach his or her
potential. And if they don't make it, neither will the rest of us.

So I am proud that we have kept the first step in
that promise by putting reading coaches in 80 of our elementary schools.

And by starting the Governor's Book Club and
supplying copies of these books to schools, we are encouraging children
to develop a life-long love of reading and learning.

This past year I hosted teacher town halls across
New Jersey and I know that our educators want to be the best teachers in
America.

And I listened to parents from every part of this
state who rightfully demand the most competent and highly skilled
teachers for their children.

New Jersey has many excellent teachers. But
because there are never enough of them, we are working with our colleges
and universities to implement uniform standards for teacher preparation
programs.

And starting in 2004, we are raising the grade
point average required to meet teacher certification.

According to a report by the respected Education
Trust, one out of eight high school classes in New Jersey is taught by
teachers without even a college minor in that subject. That is
unacceptable and it must change. We will insist teachers be certified in
the subject matter they are teaching.

New Jersey will continue to work with our
corporate partners to develop high quality summer programs for reading,
science and math teachers to help our educators continue to improve.

We must be prepared to break with past policies
and embrace new ideas that force our education system to meet the
challenges of the future, even in our highest performing schools.

Take the senior year of high school. For many
students who have already met their graduation requirements, that year
is little more than a rest stop before graduation. It is a waste of time
for students and a waste of your money.

So I propose that, for those students who "test
out" of required classes, we offer the alternatives of college level
course work, community service or work/study internships -- work that
will better prepare them for the future.

Many of our schools are severely overcrowded and
this past year we cut red tape to begin nearly 900 school construction
projects throughout our state.

In little more than 20 years, one of every two
jobs in New Jersey will demand computer literacy. We have already
updated our curriculum requirements for technology. And to make sure our
young people are ready to compete in this new economy we will start a
technology proficiency test that will be required for high school
graduation.

We must also have the vision to ensure New
Jersey's pre-eminence in education, science, and technology. Now is the
time to restructure our State public research universities into a
world-class system.

An integrated university system will strengthen
the partnership between the university and private sectors in developing
new technologies that will be the engine of future economic growth.

It will attract the most capable faculty and the
most promising research, while strengthening the communities that
surround our State universities. I want to thank Dr. Roy Vagelos for his
leadership on this most important task.

We live in a state that is the undisputed capital
of the pharmaceutical industry and is home to world-class health care
facilities.

Yet while we produce the drugs that save lives all
across the world, too little medical research into new therapies is
conducted within our borders. That must change. With new partnerships
between government and the health care industry, it will.

Every hour, two people in our state are diagnosed
with cancer, yet the majority of cancer patients leave New Jersey to get
the best treatment.

That's why, last year, we invested $20 million in
research at The Cancer Institute of New Jersey. For the first time New
Jersey is directly supporting the scientists working toward a cure to
cancer.

We've developed a special tumor registry so that
every New Jersey patient diagnosed with cancer will have greater access
to state-of-the-art clinical trials through a network of hospitals and
oncologists. We've created SWAT teams to respond to suspected cancer
clusters.

In the next budget, we will build on these
investments but we can start now by passing legislation to promote stem
cell research to be done here in New Jersey.

If we are to cure diabetes or Parkinson's or
spinal cord injuries, we must have the courage to promote this research
here in New Jersey.

We have changed Trenton to focus more on common
sense and the common good.

Never have we had a cabinet as talented, as
experienced or as diverse as this one. But as we have changed how
government operates, we must change how government behaves.

Under the leadership of Attorney General Samson,
we have started to aggressively deal with the scourge of public
corruption that has tainted too many public officials in New Jersey.

We have already combined the State Police
Corruption Unit with the Division of Criminal Justice to create a new
Special Prosecutions Unit dedicated to rooting out public corruption.

I am instructing General Samson to reassign
additional investigators and resources to the Office of Government
Integrity and to begin screening state contractors so that unqualified
or corrupt contractors do not receive state dollars.

Last year I strengthened the ethics and financial
disclosure requirements for those who serve in the Executive Branch.

It is time to hold the Legislature to the same
high standards. We can't have partially open government. That's why I
propose extending the Open Public Records Act to cover the Legislature.

I will also propose tightening disclosure
requirements and stricter conflict of interest rules so that the
Legislature has to live by the same standards and rules that apply to
the Executive Branch.

To prevent conflicts of interest -- real or
perceived -- at all levels of government, elected officials should be
barred from taking action on any issue in which they have a financial
interest.

I support "pay-to-play" reform. But let me be very
clear. I will not support nor will I sign legislation which fails to
address the conflict problem in every branch and at every level of
government. I will veto any bill that does less.

My friends, we cannot solve every problem, and we
certainly cannot fund every request. But we should be optimistic about
what we can achieve together.

I say this to every member of my Administration
and to this Legislature, Democrats and Republicans:

Our job is clear: enhancing the quality of life
for those men and women who get up early every day, work hard, and play
by the rules.

It is for them, their children, and their parents
that we must create opportunity, build stronger communities, and take
more responsibility for the future of our state.

There will be battles ahead. There will be tough
medicine in dealing with the budget and maintaining fiscal discipline.
The special interests will fight our efforts and test our commitment to
stand up for the people we serve.

We won't be able to do all we want, but we must do
all that we can.

Yet for all the problems we will deal with this
year, if we don't begin to stop overdevelopment -- the greatest threat
to our quality of life -- we will not begin to live up to our obligation
of making the lives of our people better.

It is a problem that we have talked about for
years. A problem we have tinkered with around the edges, but it is a
problem that we have effectively ignored in the hopes that it would
resolve itself. But it won't.

If we continue the way we have, it is only going
to get worse.

Our roads will get more congested, our schools
will get more crowded; open space will disappear; our property taxes
will continue to soar and the very fabric of our communities will
unravel.

We must have the courage to do what has never been
done before.

If we do this right, for generations to come, the
people of New Jersey will look back to this time and place and say that
it is when our leaders stood up for the people and fought for their
future.

They will say that this was the moment when our
leaders pursued a shared vision and their shared obligation to stand up
for those who dream of a better quality of life and stood up to those
who would destroy it.

If we do this right, we will truly leave this
state a better place to live.

Ladies and gentlemen, the people of New Jersey
sent us here to do a job -- fix their problems and stand up for them.

I will need your support, your wisdom, your
courage, and your commitment. Together, we will succeed.